Service Pricing Calculator

Build a price from burdened labor, materials, overhead recovery and the margin you need.

Your numbers

Labor hours for the jobhrsAverage wage per hour$Payroll burden (taxes, comp, benefits) (%)%Productive/billable share of paid hours (%)%Materials cost$Material markup (%)%Subcontractor cost$Travel & vehicle cost for this job$Overhead recovery per productive labor hour$Target net margin on the job (%)%

Your result

Burdened wage per hour: $35.00
True labor cost per billable hourBurdened wage divided by the share of paid hours that are actually billable.: $46.67
Labor cost on this job: $560.00
Overhead recovery: $384.00
Total cost to deliver: $1,339.00
Price to quote: $1,632.93
Effective hourly rate: $136.08
Profit on the job: $293.93
Gross margin on the job: 41.5%

Quote this job at $1,633

That's an effective rate of $136 per labor hour, covering burdened labor, materials, travel, overhead recovery and a 18% net margin. If your market won't pay it, the problem is cost structure or productivity — not the price.

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What this number actually tells you

Most service businesses price by feel, by what the last guy charged, or by what they think the customer will accept. That's not pricing, it's guessing with your own money. A price has four components: the burdened cost of the labor, the materials, a share of the overhead that keeps the doors open, and the profit the business is entitled to.

The part almost everyone misses is productive hours. You pay for forty hours and bill maybe thirty. If you price off the raw wage, you've already lost before the truck leaves. This calculator divides burdened labor by your real billable share, which is where honest pricing starts.

Overhead recovery per hour is the other missing piece. Take your annual overhead, divide by your annual productive labor hours, and every job carries its share instead of hoping volume covers it.

How the math works

01Burdened wage = wage × (1 + payroll burden %). Burden typically runs 20–30% with taxes, workers comp and benefits.
02True labor cost per billable hour = burdened wage ÷ productive hour %.
03Overhead recovery = overhead per productive hour × job hours. Calculate your rate as annual overhead ÷ annual productive labor hours.
04Total cost = labor + materials + subs + travel + overhead recovery.
05Price = total cost ÷ (1 − target net margin). Never cost × (1 + margin) — that undercharges.

What to do with the answer

Calculate your overhead-per-hour rate once a year and give it to whoever builds quotes.
Measure your real productive-hour percentage from timesheets, not from what it should be. Most field businesses land between 65% and 80%.
Price divided by hours gives your effective hourly rate — the number to compare across jobs and against your market.
If the required price is above what your market pays, look at productivity and cost structure before discounting. Discounting doesn't fix either one.

Want someone to read these numbers with you?

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Questions owners ask about this

How do I calculate my overhead rate per hour?

Add up annual overhead — office payroll, rent, insurance, marketing, software, vehicles not charged to jobs — then divide by total annual productive (billable) labor hours. If overhead is $480,000 and you bill 15,000 hours, that's $32 per hour that every quote must carry.

Should I mark up materials?

Yes. Materials carry cost you don't invoice: sourcing, pickup, handling, storage, warranty and returns. A 25–40% markup on materials is standard in most trades, and it should be separate from your labor margin.

Why divide the cost by (1 − margin) instead of multiplying?

Because margin is a percentage of price, not of cost. If your cost is $1,000 and you want 20% margin, dividing by 0.80 gives $1,250 — and $250 is exactly 20% of $1,250. Multiplying by 1.20 gives $1,200, which is only a 16.7% margin.

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